2022 Rent Growth

The year 2022 ended with multifamily rents declining another $4 to $1,715, according to Yardi Matrix’s latest survey of 140 markets. This represents a 6.2 percent year-over-year increase, down 80 basis points from November, and the lowest since May 2021. Still, the rate represents the second-highest annual growth, behind only 2021, when annual rents had increased by 15 percent. In 2023, rent growth is anticipated to fall back closer to historical levels and rise moderately. The single-family rental market also remained on a decelerating trend, with the average U.S. rent down $8 to $2,083 in December, up 4.8 percent.

Indianapolis (11.4 percent) maintained its lead among Yardi Matrix’s top 30 metros in annual rent growth, followed by San Jose (9.0 percent), Kansas City (8.3 percent), Miami (8.1 percent) and Orlando (8.0 percent). Year-over-year, all 30 metros posted positive rent growth, but only two during the fourth quarter of 2022—Indianapolis (0.4 percent) and New York (0.3 percent). Of the top 30 Matrix metros, nine—which had deliveries of at least 2.5 percent of existing stock in 2022—posted decreases in occupancy by an average of 100 basis points. In just three metros occupancy increased year-over-year: San Jose (0.7 percent) and New York and San Francisco (both 0.2 percent).

—Posted on Jan. 30, 2023

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Following sustained growth of 22 percent between January 2021 and October 2022, the national average asking rent fell $9 to $1,719 as of November, according to Yardi Matrix’ latest survey of 140 markets. This marked a year-over-year growth of just 7 percent, the lowest in 17 months, and the largest one-month rent decline in well over a decade. Year-to-date rent growth stood at 6.4 percent, while the national average occupancy rate in stabilized assets stood at 95.6 percent as of October. The single-family rental market mirrored the multifamily market and the average U.S. asking rent fell 80 basis points to 5.9 percent year-over-year, a $5 decline, to $2,091.

Demand is waning, as consumer sentiment is weakening as a result of high inflation, and economic growth is slowing due to the Fed’s measures to halt it. Of Yardi Matrix’ top 30 metros, almost two-thirds saw decreases over the last three months, and more than 90 percent saw rent contraction over the last month. On an annual basis, all top 30 metros posted growth. Indianapolis, a metro that a few months ago would have barely made it into the top 20 metros for rent increase, took the top spot in year-over-year increases (11.4 percent) and was the only metro with double-digit gains. Still, it remains among the least expensive of the major metros—the average rent rose $4, to $1,224, nearly 30 percent below the U.S. average.

—Posted on Dec. 30, 2022

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The national multifamily market posted slowing performance demand, which kept rent growth on a decelerating trend, according to Yardi Matrix’s latest survey of 140 markets. The average U.S. asking rent marked a small increase over the previous month, but year-over-year growth fell 130 basis points to 8.2 percent in October, a $3 increase to $1,727. The occupancy rate declined 50 basis points over the past year, to 95.5 percent, which is still above the long-term average. The single-family rental market is also slowing down from its recent remarkable run, with the asking rent unchanged at $2,088 in October, but an annual increase lower by 160 basis points to 6.6 percent.

The multifamily industry’s slowdown is gradual. All of Matrix’s top 30 markets posted year-over-year rent increases—above the 5 percent mark in 25 of them, and five with double-digit increases—Indianapolis (11.8 percent), Orlando (11.6 percent), Miami (11.4 percent), San Jose (10.6 percent) and Dallas (10.5 percent). However, the Federal Reserve’s rapid growth in interest rates—at 4 percent following the latest increase—dampens demand, property sales and new construction—despite the housing shortage, banks will likely cut back on financing construction projects that have not yet broken ground. Furthermore, Fed Chair Jerome Powell forecasted that interest rates will keep rising. Slowing job growth paired with macroeconomic challenges added to the faltering demand, and with home mortgage rates up to 7.3 percent in November, prospective homebuyers are forced to remain in rentals, according to the National Association of Realtors. Occupancy has fallen by at least 1 percent year-over-year in the Inland Empire (-1.0 percent), Tampa and Atlanta (-1.1 percent), Sacramento (-1.3 percent) and Phoenix and Las Vegas (-1.8 percent), and by at least 0.5 percent in 19 of Yardi Matrix’s top 30 metros.

—Posted on Nov. 30, 2022

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The accelerated rent growth from the pandemic ended in September, according to Yardi Matrix’s latest survey of 140 markets. U.S. rent growth decelerated 150 basis points to 9.4 percent on a year-over-year basis. Average rents remained flat at  $1,718 for the second straight month.

The national average occupancy rate in stabilized assets clocked in at 95.9 percent. Although moderating, rent growth still stood at 6.6 percent since the start of the year, while in a typical year in September, rents are only up 2.9 percent. Meanwhile, rents in the single-family rental sector decelerated for the second consecutive month in September, down 170 basis points to a 7.8 percent rise year-over-year. This brought the SFR rate down $7 to $2,081, with occupancy sliding 10 basis points to 1.1 percent.

Rent growth fell below 10 percent for the first time since July 2021. This downward path is partly the result of the cooling economy and the Federal Reserve’s actions to curb inflation. Just nine of Yardi Matrix’s top 30 metros kept the year-over-year rent growth above 10 percent, all in the Sun Belt corridor. The leading markets were Miami (14.3 percent), Orlando (13.3 percent) and Nashville (13.2 percent). Outmigration from gateway metros has reversed, pushed by the strong job market—a Gallup Poll reports that 50 percent of companies use a hybrid working environment while 20 percent back in the office, which induced migration close to office locations. This dynamic is reflected in the annual occupancy rate, with five of the six metros posting increases: San Francisco (70 basis points), New York and Chicago (both 40 basis points), and Los Angeles and Washington, D.C. (both 20 basis points). At 97.9 percent, New York had the highest occupancy rate.

—Posted on Oct. 25, 2022

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August marks the first month since June 2020 with tepid rent growth, according to Yardi Matrix’s latest survey of 140 markets, a trend that will likely linger by the end of the year. U.S. rent growth decelerated by 170 basis points to 10.9 percent on a year-over-year basis, to $1,718, down $1 month-over-month. Although softening, rents rose 6.6 percent on a year-to-date basis, higher than any year prior to 2021, and the national occupancy rate was 96.0 percent for the fifth straight month in July. Meanwhile, the average rent in the single-family rental sector also declined by $2 in August, to $2,090, with year-over-year growth down by 170 basis points to 9.5 percent.

Rent growth slowing is the response to the seasonality pattern—typically moderating in the fall—and to slowing migration and a cooling economy. In addition, this year comes after a period of unprecedented increases. Affordability is becoming an issue, with some examples of the trend being Orlando, Miami and Tampa, where year-over-year rent growth declined 7 to 8 percentage points over the last two months. This respite in the housing market drives demand but is met by rising inflation and a slowing job market, which lower residents’ ability to pay.

—Posted on Sep. 28, 2022

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The U.S. multifamily market posted the lowest increase in rents since January, but growth remains significant by historical standards, according to Yardi Matrix’s latest survey of 140 markets. The average U.S. asking rent rose 12.6 percent year-over-year through July, or $10, to a new high of $1,717. The rate is 260 basis points below the February peak. Rent growth gains of at least 10 percent year-over-year were registered in 24 of Yardi Matrix’s top 30 metros, while national occupancy remained at 96.0 percent for the third consecutive month. Meanwhile, the single-family rental sector posted rent growth of 11.2 percent year-over-year through July, to $2,092, and occupancy decreased by 30 basis points year-over-year through June.

The moderation in rent growth likely stems from the slowing economy paired with an inevitable return to the mean. While record rent growth in 2021 was the result of record-high absorption (580,000 units), the softening in absorption—roughly half that pace in 2022—does not send negative signals but is instead falling into values representative of a typical solid year. In addition, the slowing economic growth and waning consumer confidence could cool rent gains, but not immediately, because the Federal Reserves’ 150-basis-point increase over the last two months has slowed the for-sale market. Therefore, demand for apartments could be boosted, as first-time homebuyers need to keep renting and wait for a more favorable time to buy.

—Posted on Aug. 25, 2022

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The U.S. multifamily market posted in June the fourth consecutive month with year-over-year rent growth decline, but performance is still higher than during any previous year on record, according to Yardi Matrix’s latest survey of 140 markets. The average U.S. asking rent increased $19 to $1,706, a new all-time high. The rise represents a 13.7 percent year-over-year increase, 50 basis points lower than it was in May and 130 basis points off the February peak. U.S. rents increased an average of 1.1 percent in June, 3.3 percent during the second quarter, and 5.7 percent through mid-year. The asking rent for single-family rentals rose to an all-time high of $2,071. National occupancy rates stood at 96.0 percent.

With the economy cooling down, rent growth will be buoyed by the strong labor market, albeit at slower rates. Inflation and increasing rates are impacting the investment market, which will benefit the rental markets. Florida metros continued to lead in rent growth—Orlando (24.0 percent), Miami (23.4 percent) and Tampa (20.3 percent), but even the bottom ranking metros posted solid gains—San Francisco (9.7 percent), Baltimore (9.4 percent) and Twin Cities (5.1 percent). Overall, asking rents increased by at least 10 percent in 25 of the top 30 markets, but some signs of slowing migration and/or household formation appeared. Occupancy rates decreased in 11 metros in May, led by Las Vegas (-1.6 percent year-over-year), Phoenix (-1.1 percent), Sacramento (-1.0 percent) and the Inland Empire (-0.8 percent), but continue to recover in San Jose (2.0 percent), New York (1.5 percent) and Chicago (1.4 percent).

—Posted on Jul. 27, 2022

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The U.S. multifamily market maintained a remarkable performance, below only that of 2021, according to Yardi Matrix’s latest survey of 140 markets. Although the average national rent growth decelerated by 40 basis points, it still means an increase of 13.9 percent year-over-year through May, which equates to a $19 gain in the asking rent, to a new all-time high of $1,680. Rent growth was up 1.1 percent month-over-month and 3.0 percent on a trailing three month basis; this performance is below the level registered in 2021, but well above any other year. Nationally, asking rents increased by $70 since the start of 2022.

Sun Belt metros remained in the lead in rent growth—Miami (24.2 percent), Orlando (23.2 percent) and Tampa (21.6 percent)—while another 23 of the top 30 markets had asking rents rise by at least 10 percent. The lowest rent gains were registered in Baltimore (9.1 percent), San Francisco (8.7 percent) and Twin Cities (5.2 percent). While gateway metros continue to rebound from the pandemic low as illustrated by the occupancy rate—New York (2.1 percent), San Jose (2.0 percent) and Chicago (1.5 percent)—some high-growth metros exhibited drops in occupancy. Specifically, seven metros posted declines in the occupancy rate, led by Las Vegas (-1.1 percent year-over-year), Sacramento and Phoenix (-0.7 percent). This drop can be attributed in some markets to incoming inventory, however, with the new supply in others on par with the national average, and with the average rent up at least 13 percent year-over-year in each, it can also signal weakening demand.

—Posted on Jun. 21, 2022

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The national multifamily market continued its strong performance into the second quarter, with the average rent increasing by another $15 in April, to a new high of $1,659, according to Yardi Matrix’s latest survey of 140 markets. The rate of growth moderated by 50 basis points, but remains high at 14.3 percent year-over-year. The average U.S. multifamily asking rent increased by $50 since the beginning of 2022. Demand appears to be slowing in the Sun Belt and West regions, as the average occupancy rate in stabilized properties year-over-year has decreased in four metros—Las Vegas (-0.8 percent), Phoenix and Sacramento (-0.5 percent) and the Inland Empire (-0.4 percent). Meanwhile, New York and San Jose were in the lead, with 2.4 percent gains.

Despite the softening economic growth right after the record year for the multifamily sector, the market continues to post remarkable performance, with the year-over-year growth rate above the 14.0 percent mark for five consecutive months. Still, headwinds have intensified: the U.S. economy contracted by 1.4 percent in the first quarter of 2022—due to surging inflation, ongoing supply chain issues, shrinking business inventories and the omicron outbreak. Moreover, the Federal Reserve will likely maintain its rigid policies that will hinder growth. Still, the demand-supply dynamic for multifamily is strong enough to withstand a modest economic slowdown. Furthermore, the employment market is recovering well and increased consumer spending during the first quarter points to healthy household finances. The for-sale segment of the housing market is likely to be impacted more and keep some renters in apartments, but household formation is anticipated to remain strong.

—Posted on May 23, 2022

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The national average asking rent has decelerated compared to the breakneck pace of 2021, but otherwise marked new record gains in March, according to the latest Yardi Matrix survey of 140 markets. The average U.S. growth rate slid 50 basis points to 14.8 percent on a year-over-year basis, bringing the overall average rent to an all-time high of $1,642, up $14. Rent performance during the first quarter of 2022 also marked a record, with rents up 2.1 percent, or $34. The overall asking rent is $212 higher than it was in March 2021.

It’s expected that rent growth will moderate below 2021 levels, especially compared to the levels seen in the second quarter. Household formation is also likely to soften this year—estimates put the number of new households formed in 2021 in the two million range, while for 2022, household growth and absorption are expected to drop to about half.

—Posted on Apr. 27, 2022

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The much-anticipated rent depreciation evaded the month of February, as the market actually defied expectations, with year-over-year growth at 15.4 percent, according to Yardi Matrix’ latest survey of 140 markets. The gain marks a new peak and translates to a $10 rise in the average U.S. asking rent, to $1,628. Moreover, of the top 30 metros, 90 percent posted double-digit rent growth on an annual basis, with the slowest registered in the Twin Cities, at 5.3 percent. Even though rent growth is estimated to slow down below the pace set starting in March 2021, demand doesn’t show signs of cooling off.

The same robust demand continued through the start of 2022, reflected in the average occupancy rate in stabilized properties, which rose 120 basis points year-over-year as of January. Of the top 30 markets, only two had occupancy rates below the 95 percent mark, a significant improvement from 17 a year ago. The occupancy rate points to a rebound in gateway markets, which during the first year of the pandemic saw population declines: New York (2.9 percent), San Jose (2.8 percent) and Chicago (2.6 percent). High-growth/high-supply metros also posted solid increases in occupancy—Nashville (2.3 percent) and Austin (2.1 percent). Phoenix, Sacramento and the Inland Empire (-0.2 percent) and Las Vegas (0.1 percent) reported the weakest performances. However, these markets already had tight occupancy rates and some of the highest asking rent growth performances in the nation, due to their alluring profile to renters relocating from more expensive locations.

—Posted on Mar. 25, 2022

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In the first month of 2022, the national average asking rent posted an $8 increase, to $1,604, marking yet another new high, according to the latest Yardi Matrix survey of 140 markets. The gain represents a 13.9 percent year-over-year increase, 30 basis points above December. Even though there’s a low likelihood that performance will remain as elevated throughout 2022, January’s rate signals continued demand.

The average U.S. asking rent rose to $1,600 from $1,500 in just seven months and $1,500 from $1,400 in 10 months. Previous $100 increment increases took two to three years or more, according to Paul Fiorilla, author of the report and associate director of research at Yardi Matrix. “The recent rent growth acceleration is unprecedented,” he said.

—Posted on Feb. 28, 2022